Eun Sung-soo: "Please consider sharing the burden of rising interest rates between banks and borrowers"

Sunshine Loan Bank Agreement Ceremony and Meeting on the 1st

[Asia Economy Reporter Park Sun-mi] "We ask banks to actively consider ways for banks and borrowers to share the burden during the interest rate hike period."

Financial Services Commission Chairman Eun Sung-soo requested the banking sector to minimize unnecessary household loan issuance and to consider measures that allow borrowers and banks to share the burden during the interest rate hike period, in relation to the rapidly increasing household debt during the COVID-19 response process.

On the 1st, Chairman Eun addressed bank presidents attending the Hae-sal-loan Bank agreement ceremony and meeting, saying, "Household debt has rapidly increased during the COVID-19 response process, which is a major potential risk factor for our economy going forward. Given the prolonged low interest rate environment, it is now necessary to manage the risks of rising interest rates, and tight household debt management is required in the second half of the year. I earnestly ask the banking sector to minimize unnecessary household loan issuance."

Chairman Eun stated, "Since the government policy cannot fully mitigate the risks during the interest rate hike period, borrowers should reduce future interest rate fluctuation risks by opting for fixed-rate loans rather than variable-rate loans. Also, rather than having borrowers bear the entire burden during the interest rate hike period, we must actively consider measures such as ‘interest rate cap mortgage loans’ and ‘fixed monthly repayment mortgage loans’ that allow banks and borrowers to share the burden."

Regarding Hae-sal-loan Bank, he said, "It is a result of joint efforts by the Financial Services Commission, the Korea Inclusive Finance Agency, and the banking sector since last year as a new policy financial product for low-income earners. The government continues to improve systems to alleviate the financial burdens and difficulties faced by low-income people, such as the statutory maximum interest rate reduction (from 24% to 20%) effective from the 7th and the new low-income financial contribution system effective from October 9."

He added, "Through the launch of Hae-sal-loan Bank, low-credit and low-income individuals who previously had difficulty accessing banking services will have the opportunity to transact with banks if they faithfully repay existing policy financial products."

Hae-sal-loan Bank is scheduled to be piloted with a supply target of 300 billion KRW through the second half of this year, starting with the first release on the 26th of this month. Chairman Eun emphasized, "We will prepare next year’s supply plan for Hae-sal-loan Bank after monitoring actual demand and improving shortcomings during the pilot operation period. The government will also oversee the execution status to ensure sufficient supply and easy access for low-income people."

This content was produced with the assistance of AI translation services.